India will see GDP growth of more than 7% this decade due to economic reforms: CEA

Chief Economic Adviser KV Subramanian on Sunday hailed the economic reforms once again and said that India will see a GDP growth of more than 7% in the decade. Virtually delivering the Centenary Lecture on the occasion of the 100th Foundation Day of the Mumbai School of Economics & Public Policy, Subramanian said that India ‘stands out singularly’ as the country to have instituted such path-breaking reforms. The CEA had earlier claimed that the country is expected to hit a growth rate of 6.5-7% in 2022-23 and accelerate further to 8% in the subsequent years.

K V Subramanian during the virtual address lauded India’s efforts on the economic front. “If we look at the countries and the various measures taken by them over the last year and a half, India stands out singularly as the one and only country that has instituted such path-breaking reforms during this period, the CEA said. Further asserting India’s estimated growth, he said, “India will see GDP growth of more than 7% this decade due to economic reforms. Much like the 1991 reforms that created a huge momentum of growth for over three decades, the reforms over the last year and a half will also position India for a very high growth pace in the coming decades.”

India's economic reforms are a ‘tripod’, says CEA

Subramanian elaborated on the force driving the economic reforms in India over the last year and a half and said that it can be seen as a ‘tripod’. According to the CEA, the first leg of India’s economic reforms is the objective of macroeconomic focus on growth combined with a microeconomic focus on efficient welfare to welfare programmes like education, job creation, thereby reducing inequality. He further explained that the second leg is wealth creation through privatisation, asset monetisation and enterprise policy focus on the private sector.

The CEA said, “the third leg is focusing on the virtuous circle, starting from a private investment that generates productivity improvement and thereby enables job creation and enhance wages in the economy which eventually enhances consumption as there is more money in the hands of people. This must be the vision for India to pursue high growth and thereby higher development.”

Emphasising the growth trajectory, Subramanian also said that the MGNREGA programme has become a better vehicle for distressed employment. He also shed light on the challenges the country faced during the period of the pandemic. “When we start growing at 7, 7.5%, let us not forget the pandemic years for the next two-three decades. We should not ignore the fact of the Pandemic year.” He went on to say that the growth is more important for the less privileged section and the smaller firms in such periods. “We need growth so that we have resources to do efficient welfare,” the CEA said.

CEA lauds private investment as a key factor in the Indian economy's growth

Speaking about the significance of privatisation, Subramanian said, “Durable growth comes only from private investment. Consumption-driven growth does not deliver durable growth. Our history is very clear that respecting the invisible hands of markets and enabling trade was an important fact of our DNA. Reforms that we are now undertaking is basically India going back to its DNA. When we acknowledge that the respect for the private sector, trade, markets has been part of our DNA and that is what has led to such prosperity, then this will not create resistance among the average Indian.” The CEA also noted that the supply-side reforms, which remove friction in supply-side economies, will help to increase private investment.

IMAGE: PTI